The parser in C has to keep track of the symbol table to handle cases like

   typdef int myint;
   myint x;

which is unusual among programming languages. Sure I used VM on IBM hardware in the 1980s and it was great. I also used timesharing systems on the PDP-8 (what atrocious hardware!), the PDP-11 and the PDP-10/20 in the 1970s. Although the 360 was superior in so many respects (except for the slow interrupt handling) it failed to break into the huge market for general-purpose timesharing to support software development and such (learning BASIC) until the time microcomputers came along and crushed the timesharing market. (PDP-10 was famously used to develop microcomputer software such as the original Microsoft BASIC and Infocom's z-machine games)

Fred Brooks' project to develop an OS for the 360 was notoriously troubled and IBM belatedly turned to VM as a dark horse. Today it looks ahead of its time (as virtualization became mainstream on x86 in the 00's) but back then IBM was flailing and they wound up with a good software story by accident. It was not really their fault, people just didn't know how to make an OS and the most advanced thinking back then was monstrosities like MULTICS. It was Unix and VAX/VMS that pointed to what a general purpose OS would look like a few years later and there has been relatively little innovation since then because nobody can afford to rearchitect the user space. (e.g. no way you can take out the "bloat" because you'll have to put it back in to run the software you want)

IBM's z-architecture (the other z) has a great software story today (even runs Linux) but it was not the Plan A or even the Plan B.